The BBC backlash: Thompson hits out at Murdoch

Following a stinging attack from the head of News Corporation last month, the BBC yesterday promised a 'radical review'. But before a pen had been lifted, director general Mark Thompson had emailed all his staff branding his chief critic 'hopelessly out of touch'. Ian Burrell reports

The BBC is to be the subject of a "radical review", which could lead to the end of some of its services amid claims that the organisation has become too big and is damaging the future of the commercially funded media in Britain.

But Mark Thompson, the director general of the BBC, who will conduct the strategic review at the behest of the BBC Trust, the body which governs the Corporation, yesterday appeared to pre-empt its findings by issuing a bullish email to all staff, claiming that the organisation's critics were "desperately out of touch" with public opinion.

The review was announced yesterday by the BBC Trust chairman, Sir Michael Lyons, who took the unprecedented step of publishing an "open letter to licence fee payers", which he said he was doing "because there has been a lot of public debate recently about the future of broadcasting".

In his letter he said: "We want this [review] to consider whether the BBC is the right size and is operating within the right boundaries, what its role should be in a fully digital world, how it can support the wider industry and UK economy, and how it can provide more of the genuinely fresh and new programmes that audiences want."

Sir Michael said that one of the strongest areas of contention was the argument "that the BBC should be much smaller and should scale back its involvement in areas such as providing news for free on the internet".

At the end of last month, James Murdoch, the heir to his father Rupert's News Corporation empire, told the Edinburgh International Television Festival that the BBC was involved in a "chilling" land grab that posed a "serious and imminent" threat to the future provision of news in Britain. "Dumping free, state-sponsored news on the market makes it incredibly difficult for journalism to flourish on the internet," said Mr Murdoch. "It is essential for the future of independent digital journalism that a fair price can be charged for news."

In his email to staff, Mr Thompson hit back at Mr Murdoch's claims. "We've seen a relentless onslaught from the press over the summer, culminating in James Murdoch's MacTaggart Lecture," he said. "The most important thing to say about that lecture and about many of the recent attacks on the BBC is that they are desperately out of touch with what the audiences are telling us."

Sir Michael went out of his way to stress that the strategic review was not a response to Mr Murdoch's criticism, saying that it had been agreed with the BBC executive in June. In an interview with BBC Radio 4's The Media Show, he rejected the idea that the BBC website should be held responsible for the difficulties of newspapers in charging for their online content. "Let me say now that I would be amazed if the BBC retreated from its trusted position as a provider of free, impartial, accurate news to the British public," he said. Asked if such a policy might endanger the future of a free press, he responded: "I have heard those arguments that it complicates life for British newspapers; there's no doubt that the rise of the internet challenges both the role and the funding of newspapers but that's the same across the world."

He said he had asked Mr Thompson to "begin a radical review" and said "it might lead to changes in services and indeed the end of some services".

Last night the Radio Centre, the body which represents the commercial radio sector, claimed that the whole exercise was nothing more than a "pre-emptive strike" by the BBC ahead of likely cuts to the Corporation's funding if the Conservatives form the next government. "This is the first shot in the war in terms of the relative size of that settlement," said the Radio Centre chief executive, Andrew Harrison.

In his Radio 4 interview, Sir Michael warned that "one government makes a promise and then another government comes along and says 'We are under pressure to do things, let's fund it from this source' and before you know where you are the licence fee is merged with general taxation".

Mr Harrison criticised Sir Michael for publishing his open letter at all. "I think it's extraordinary that it's the chairman of the regulator delivering this message rather than the executive. This is a blurring of the lines between Sir Michael's regulatory role and his evangelising for the BBC."

The BBC has faced criticism from the commercial radio sector over the way publicly funded networks such as Radio 1 and Radio 2 dominate the segment of the population most important to advertisers.

Sir Michael's public letter also addressed the issue of whether a share of the BBC's licence fee money, left over after the completion of the switchover to digital media in 2012, should be made available to commercial media companies to provide regional news. He said that the findings of an Ipsos/Mori poll had found that "the public would not want it hived off and given to other media outlets". Only 6 per cent wanted the money given to other providers of regional news and half of respondents backed the idea of using the money to reduce the licence fee by £5.50, he added.

Mr Thompson said the finding showed the public supports "our stand" on resisting "top slicing" of the licence fee to share some of the money with other media outlets, as has been proposed in the Government's recent Digital Britain report.

But he said he would take a "searching look at what the BBC should look like... post-2012" and look at "how we can help promote the right environment for the creative industries as a whole, an environment in which other media providers can flourish".

Sir Michael Lyons' open letter: Edited extracts

Dear licence fee payer,

There has been a lot of public debate recently about the future of broadcasting, with much questioning of the role and size of the BBC.

Recent debate has focused on two arguments. The first is that the BBC should be much smaller and should scale back its involvement in areas such as providing news for free on the internet. The second, as proposed by the government, is that the licence fee should be shared and an element should pass to... media companies.

I completely agree with those who say we should trust the public more and let them drive what they get from their broadcasters. You tell us that you want a strong, independent BBC and are willing to pay for it. Equally, you are clear that you expect good value.

The BBC needs... to deliver value to the public, both as consumers of BBC services and citizens in the vital area of news. It needs to make sure it doesn't ask the public for more money than it needs. The trust has championed efforts to serve all audiences; more distinctive programmes; tighter editorial standards; imaginative partnerships and better value for money, including on executive pay.

We have acted to curb BBC activities which impact on the wider industry.

We want a BBC that is smarter, more efficient and no bigger than it needs to be. We will consider these and other issues carefully over coming months.